Tar DNA Binding Protein-43 (TDP-43) is a principle component of inclusions in many cases of frontotemporal lobar degeneration (FTLD-U) and amyotrophic lateral sclerosis (ALS). TDP-43 resides predominantly in the nucleus, but in affected areas of ALS and FTLD-U central nervous system, TDP-43 is aberrantly processed and forms cytoplasmic inclusions. The mechanisms governing TDP-43 inclusion formation are poorly understood. Increasing evidence indicates that TDP-43 regulates mRNA metabolism by interacting with mRNA binding proteins that are known to associate with RNA granules. Here we show that TDP-43 can be induced to form inclusions in cell culture and that most TDP-43 inclusions co-localize with SGs. SGs are cytoplasmic RNA granules that consist of mixed protein - RNA complexes. Under stressful conditions SGs are generated by the reversible aggregation of prion-like proteins, such as TIA-1, to regulate mRNA metabolism and protein translation. We also show that disease-linked mutations in TDP-43 increased TDP-43 inclusion formation in response to stressful stimuli. Biochemical studies demonstrated that the increased TDP-43 inclusion formation is associated with accumulation of TDP-43 detergent insoluble complexes. TDP-43 associates with SG by interacting with SG proteins, such as TIA-1, via direct protein-protein interactions, as well as RNA-dependent interactions. The signaling pathway that regulates SGs formation also modulates TDP-43 inclusion formation. We observed that inclusion formation mediated by WT or mutant TDP-43 can be suppressed by treatment with translational inhibitors that suppress or reverse SG formation. Finally, using Sudan black to quench endogenous autofluorescence, we also demonstrate that TDP-43 positive-inclusions in pathological CNS tissue co-localize with multiple protein markers of stress granules, including TIA-1 and eIF3. These data provide support for accumulating evidence that TDP-43 participates in the SG pathway.